TELEPERFORMANCE_Registration_document_2017

CONSOLIDATED FINANCIAL STATEMENTS

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7.6 Notes to the consolidated financial statements

NOTE A.3 Impairment

Non-financial assets Non-financial assets of the Group (non-current assets) are reviewed at each reporting date to determine the amounts of any impairment losses that should be recognized. Financial assets A financial asset is considered to be impaired if there is objective evidence that one or more events have had a negative effect on the asset’s estimated future cash flows. NOTE A.4 Determination of fair values Certain accounting policies and disclosures require determining the fair value of financial and non-financial assets and liabilities. Additional information about assumptions used in determining fair value is disclosed, where necessary, in the specific notes for the asset or liability involved. In general, fair values for significant asset and liability categories are determined as follows: Property, plant and equipment The fair value of property, plant and equipment that is recognized following a business combination, principally buildings, is based on market value. The market value of a building is the estimated amount which would be obtained from the sale of the asset under normal conditions between a buyer and a seller at the measurement date. Intangible assets The fair value of brand names and software acquired during a business combination is based on the discounted present value of estimated royalties avoided through their acquisition. The fair value of customer relationships acquired during a business combination is based on the multi-period excess earnings method, under which the asset is measured at the amount of estimated cash flows net of a reasonable return allocated to other assets. Accounts receivable – Trade and Other current assets The fair value of Accounts receivableb– Trade and Other current assets is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting date. NOTE A.5 Glossary EBITA or current EBITA: ( Earnings Before Interest, Taxes and Amortization ): Operating profit before amortization of intangible assets acquired as part of a business combination, goodwill impairment charges and non-recurring items. ROCE: rate of Return On Capital Employed calculated using the NOPAT/Capital Employed formula. NOPAT: operating profit excluding non-recurring items times the effective rate of taxation.

The impairment loss of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate of financial assets. An impairment test is performed individually on each significant financial asset. Other assets are tested in groups with similar credit risks. Impairment losses are recognized in the statement of income.

Derivatives The fair value of forward currency contracts is based on their quoted market price when available. If no quoted market price is available, the fair value is estimated by discounting to the present value the difference between the contractual forward price and the current forward price on the residual term of the contract, by using an interest rate based on the money market. The fair value of interest rate swaps is based on estimations provided by the banks and corresponds to the estimated amount that the Group would receive or pay to terminate the swap at the reporting date, taking into account current interest rates and counterparty risk. Non-derivative financial liabilities The fair value, which is determined for disclosure purposes, is based on the present value of future cash flows generated by principal and interest repayments, discounted at the market interest rate at the reporting date. For finance lease agreements, the market interest rate is determined from similar lease agreements. Share-based payments The fair value of incentive plan shares awarded to employees is measured principally using the market price of the share at the grant date, the expected dividends and the post-vesting retention period, as well as performance conditions when these are market conditions. The service and performance conditions necessary for vesting are not considered when determining fair value when these are not market conditions. Capital Employed: the total of goodwill, intangible assets and property, plant and equipment, and items of working capital. Non-recurring items: principally comprises restructuring costs, incentive share award plan expense, costs of closure of subsidiary companies, transaction costs for the acquisition of companies, and all other expenses that are unusual by reason of their nature or amount. Net financial indebtedness or Net debt: the total of current and non-current financial liabilities, less cash and cash equivalents.

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Teleperformance bb - bb Registration documentbb 2017